25th Feb 2014 15:03
LONDON (Alliance News) - GKN PLC said Tuesday that pretax profit fell to GBP484 million for the year, as returns from FX contracts were comparatively reduced on the previous year, while still booking a 10% boost in operating profit for the period.
Despite the 15% drop in pretax profit, down from the GBP568 million reported last year, GKN said operating profit rose 20% during the year, up to GBP661 million from the GBP553 million reported for 2012.
The aerospace, automotive and land systems firm, which makes the wings for Airbus planes, Tuesday reported the lower foreign exchange contract gains as it continued to face challenges in some of its end markets.
GKN said that the pretax profit decrease was primarily attributable to a smaller gain on the mark to market of foreign exchange hedging contracts than in 2012. On a management basis, pretax profit increased to GBP578 million, from GBP493 million, said the firm.
In its results for the year to December 31 2013, earnings per share rose by 9% to 28.7 pence, from 26.3 pence last year.
The GKN board has recommended a final dividend of 5.3 pence per share; the firm therefore boosts its total dividend per share by 10% to 7.9 pence from 7.2 pence per share, payable May 21 2014 to shareholders on the register at April 11 2014.
On a divisional basis, GKN Aerospace recorded sales of GBP2.2 billion from the year, up from GBP1.8 billion last year; the firm noted that GBP22 million in restructuring and acquisition charges related to GKN Aerospace Engine Systems were included in the reported trading margins.
GKN Driveline sales also rose to GBP3.4 billion from GBP3.2 billion in 2012, recording growth ahead of global auto production, said the firm. GKN Powder Metallurgy sales were boosted to GBP932 million from GBP874 million, with the division's trading margin increasing to 10.1%.
GKN Land Systems' sales dropped to GBP899 million from GBP933 million last year. GKN said organic sales were down 6% due to challenging end markets and chassis contracts ending.
Sales were buoyed 10% on a management basis, reaching GBP7.6 billion, up 10% from GBP6.9 billion last year, on a reported basis, sales rose 10% to GBP7.1 billion from GBP6.5 billion.
The firm, which operates in the global aerospace, automotive and land systems markets, said its results for the year reflect the, "continued strong organic growth in Automotive businesses, the contribution from GKN Aerospace Engine Systems (previously Volvo Aero) and the weaker performance of GKN Land Systems."
The firm noted that the contribution from GKN Aerospace Engine Systems for the year, its first full year of GKN ownership, recorded GBP656 million in sales and a GBP92 million trading profit, including a GBP4 million restructuring provision release, resulting in a trading margin of 14.0%.
Looking ahead the company said commercial aircraft production should continue to grow in the coming year, while military demand is set to decline. GKN Aerospace's 2014 sales are expected to be slightly higher than the prior year, it said, due to its presence on new commercial programmes, despite lower military sales, and the full-year impact of the previously announced transfer of a supply chain contract back to Airbus.
External forecasts note that global light vehicle production are expected to grow around 3% with increases in China, North America and Europe but Japan decreasing. GKN said that against these forecasts, the GKN Driveline and GKN Powder Metallurgy businesses are expected to continue to grow above the market.
"Overall, 2014 is expected to be another year of continued progress. Whilst adverse currency could provide a significant translational headwind, this should be outweighed by the benefits of the Group's diverse exposure to global markets, strong customer positions and healthy order books," GKN said in a statement.
Chief Executive Nigel Stein added, "We have again made good progress in-line with our strategy to grow a market-leading global engineering business. Although some of our end markets were challenging, we continued to show growth and are reporting good underlying financial results, helped by our 2012 acquisition of GKN Aerospace Engine Systems, which performed strongly. We expect the Group's progress to continue in 2014."
Shares in GKN were trading down 2.3% at 405.4 pence per share Tuesday afternoon.
By Alice Attwood; [email protected]; @AliceAtAlliance
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